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  • FIRST POST
    • seb2020
    • By seb2020 13th Jun 19, 4:00 PM
    • 17Posts
    • 1Thanks
    seb2020
    Sipp - To use or not to use an IFA
    • #1
    • 13th Jun 19, 4:00 PM
    Sipp - To use or not to use an IFA 13th Jun 19 at 4:00 PM
    Is there any real benefit (financial or otherwise) in using a regulated Independent Financial Advisor or Financial Planner for the purposes of setting up and running a Sipp investment portfolio?

    What are your views on going down the DIY route (if you have the confidence to do so) and use a number of passive diversified tracker funds and managing the Sipp yourself?

    What are your reasons for:-

    1/ Not using an Independent Financial Advisor or Financial Planner for the purpose of choosing a Sipp funds portfolio.

    2/ Using an Independent Financial Advisor or Financial Planner to choose the Sipp funds portfolio.
Page 3
    • seb2020
    • By seb2020 14th Jun 19, 1:57 PM
    • 17 Posts
    • 1 Thanks
    seb2020
    ...
    I've been retired for 5 years and most of my money is in a simple 3 fund tracker portfolio...
    Originally posted by bostonerimus

    Which 3 fund tracker are you using?
    • MallyGirl
    • By MallyGirl 14th Jun 19, 2:17 PM
    • 3,975 Posts
    • 9,415 Thanks
    MallyGirl
    bostonerimus is in the US so things are a little different there
    • Audaxer
    • By Audaxer 14th Jun 19, 4:44 PM
    • 1,877 Posts
    • 1,177 Thanks
    Audaxer
    This is a really important point that people seem to miss when just looking at returns and charges, especially during retirement. A lower level of volatility is prefered when withdrawing and therefore if the IFA portfolio can produce a good return for a lower level of risk then that is worth considering. If the IFA can also out perform then thats great too.

    Way too much time is spent worrying about charges compared to thinking about someone's goals. Things get more complicated when you get close to retirement.
    Originally posted by Prism
    I agree a lower level of volatility is preferred in retirement, but I have read that the benefit of a portfolio single sector funds that aren't all correlated, can be relatively low in volatility overall, although some of the individual funds could be quite volatile. The idea being that you withdraw from the best performing funds and rebalance by to your original weightings. I think this is a difficult strategy for a lot of DIY investors to have the confidence in picking the right active funds and right weightings, myself included.

    Even with the higher fees, if you could find a good IFA, maybe they would achieve better returns, net of fees, than many of us DIY investors could achieve with low cost multi asset funds?
    • bostonerimus
    • By bostonerimus 14th Jun 19, 4:55 PM
    • 3,309 Posts
    • 2,630 Thanks
    bostonerimus
    Which 3 fund tracker are you using?
    Originally posted by seb2020
    A global equity index, a domestic equity index and a domestic bond index fund. In the UK you could do something very similar and choose an allocation that matches your circumstances and appetite for risk......personally I'm around 50% US equity (that's domestic for me), 30% global equity and 20% bonds....or look into a multi-asset fund.
    Last edited by bostonerimus; 14-06-2019 at 4:57 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 14th Jun 19, 5:07 PM
    • 3,309 Posts
    • 2,630 Thanks
    bostonerimus
    I agree a lower level of volatility is preferred in retirement......
    Originally posted by Audaxer
    In fact some studies have shown that a rising equity allocation (and presumably volatility) improves the probability of retirement plan success.Of course that has to be balanced against the low probability of a catastrophic failure that would wipe out a plan so the amount of income required relative to the pot size is a critical factor.
    Misanthrope in search of similar for mutual loathing
    • beamyup
    • By beamyup 14th Jun 19, 5:18 PM
    • 146 Posts
    • 43 Thanks
    beamyup

    Even with the higher fees, if you could find a good IFA, maybe they would achieve better returns, net of fees, than many of us DIY investors could achieve with low cost multi asset funds?
    Originally posted by Audaxer
    If only

    Any IFA able to consistently beat the market is in the wrong job or is misrepresenting.
    • Prism
    • By Prism 14th Jun 19, 5:33 PM
    • 1,156 Posts
    • 874 Thanks
    Prism
    If only

    Any IFA able to consistently beat the market is in the wrong job or is misrepresenting.
    Originally posted by beamyup
    I doubt anyone would claim they can consistently beat the market. What would that even mean - every month, every year, each 5 year period?

    Having said that, beating the index is entirely possible by choosing the right funds - just not guarenteed
    • Mordko
    • By Mordko 14th Jun 19, 5:39 PM
    • 432 Posts
    • 199 Thanks
    Mordko
    The best approach is to educate yourself, write your own investment policy and execute.

    The second best approach is to read up about risk, decide on your stock/bond allocation and pick an appropriate multi asset fund with low costs. There is nothing wrong with getting an IFA to review, if you have questions or lack confidence.

    Avoid complex IFA-designed mess of a portfolio requiring regular attention and incurring thousands in fees every single year. That’s a guaranteed damage to your and your family’s long term prosperity
    • bostonerimus
    • By bostonerimus 14th Jun 19, 6:44 PM
    • 3,309 Posts
    • 2,630 Thanks
    bostonerimus
    For the vast majority of people if their portfolio is complex enough to require management from an IFA then it's very probably too complicated
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 14th Jun 19, 6:48 PM
    • 3,309 Posts
    • 2,630 Thanks
    bostonerimus
    FYI I just got this email from my last employer as I still have some money in one of their retirement funds....it would be nice if more employers/HR&benefits departments could offer this sort of advice, but I think the UK has some pretty strict rules on advice, which is good if it acts as a "quality" control, but bad if it restricts availability and keeps costs high.

    I'm going to ignore it as I don't think it would be much use to me, but I'm sure it would be useful for many to have free and unbiased advice like this.


    You're invited to schedule a 1-on-1 appointment with Carl xxxxxxxxxx, your Retirement Plan Advisor.

    Your Retirement Plan Advisor will:



    Help you determine a possible retirement age.



    Help you project your future retirement income from all sources, including: pension, Social Security, the Sxxxx Plan and other retirement accounts.



    Provide suggestions for your retirement, including savings rate and investment allocation.

    * Your spouse is welcome to attend.
    Last edited by bostonerimus; 14-06-2019 at 7:07 PM.
    Misanthrope in search of similar for mutual loathing
    • Apodemus
    • By Apodemus 15th Jun 19, 11:09 AM
    • 1,452 Posts
    • 1,228 Thanks
    Apodemus
    For the vast majority of people if their portfolio is complex enough to require management from an IFA then it's very probably too complicated
    Originally posted by bostonerimus
    Bostonerimus, while I agree with you in principle, in practice it is quite easy to find yourself with a complex structure that an IFA might be best-placed to resolve.

    I spent several hours yesterday creating a new version of my pension planning spreadsheet and playing out different scenarios. Some of the best scenarios were quite counter-intuitive and would not have been clear to me without the modelling - for those that are not spreadsheet geeks, an IFA might be the next-best approach.

    The various income categories to the spreadsheet require me to model 13 input rows and I donít think my situation is much more complex than average. These include current salary for the years up to retiral, state pension, workplace DB pension, DB pension TFLS, SIPP, SIPP TFLS, Old DC pension, DC Pension TFLS, unwrapped stocks, S&S ISA, Income tax, drawings/payments from/to cash account. At this stage, these canít be simplified much further and there are fairly frequent threads on the MSE boards where people make mistakes by tackling this complexity with insufficient knowledge. Again these people would benefit from the skills of the IFA.

    Personally, Iím just too mean to pay for the advice that I probably need!
    • bostonerimus
    • By bostonerimus 15th Jun 19, 11:51 AM
    • 3,309 Posts
    • 2,630 Thanks
    bostonerimus
    Bostonerimus, while I agree with you in principle, in practice it is quite easy to find yourself with a complex structure that an IFA might be best-placed to resolve.
    Originally posted by Apodemus
    Taxation and the structuring of accounts can be complicated and so for that I can see the utility of an IFA if it all gets a bit too complicated.

    It's all too easy to collect accounts over the years, so an effort to rationalise if useful. Myself I have money in 3 platforms and a couple of bank accounts with differing withdrawal rules and tax consequences, but I have simplified where possible and frankly I basically ignore my investments and retirement pot for 99% of the year and only have to do anything at tax time.
    Misanthrope in search of similar for mutual loathing
    • atush
    • By atush 15th Jun 19, 2:17 PM
    • 17,955 Posts
    • 11,400 Thanks
    atush
    Do you mean £20k or have you missed a zero off?
    Originally posted by davidwatts
    i meant what i said. And I said North. once you are up to triple digits you should look at using an IFA but you can do it before. it just isnt cost effective with low amounts for you or the IFA.
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